Main navigation

Ethereum

We’re going back to basics today. And we thought we’d use this opportunity to share our Coinbase link – so, in the interest of full disclosure, we could be compensated if you sign up with this link. But, once you spend $100 worth on Bitcoin or Ethereum, you’ll get $10 worth of Bitcoin, too. Win-win.

Basics: What is Coinbase?

Veterans of this space might be surprised when they realize that Coinbase has been around since June 2012. Here’s how they describe themselves.

Founded in June of 2012, Coinbase is a digital currency wallet and platform where merchants and consumers can transact with new digital currencies like Bitcoin and Ethereum. We’re based in San Francisco, California.

And, oh my goodness do they have a foothold on this digital wallet space, having raised more than $117m from leading tech investors and venture capital firms. You can see a complete writeup on Crunchbase, one of our favorite tech info sites.

What’s a Wallet?

It might seem obvious, but it’s worth a mention nonetheless: a wallet is where you store your coins. Read this from Coindesk if you’re looking for more advanced info, but, for now, just think of the basic idea as an old school wallet, like the one you’d put in your pants pocket or purse.

In the typical American wallet, you’re likely to find cash – FIAT CURRENCY! – identification, and maybe some credit cards. Some of what’s in a physical wallet is innocuous, right? I mean, everyone holds onto a fortune from their last trip to the Chinese restaurant, don’t they? But it’s that other information that you guard carefully – your ID card is a pain to lose, and you wouldn’t just give out your credit card number or the CVC code on the back to any random stranger.

Your digital wallet can be looked at the same way – in fact, some of the information that moves Bitcoin (or Ethererum, we’ll use Bitcoin throughout this article as a catch-all for the digital currencies on the Coinbase system) back and forth is better thought of as in a safety deposit box or a safe.

The public component to your wallet is the Bitcoin address, and this is something you can give out to anyone and everyone. This is INBOUND. You can use it as a tip jar, you can ask your Uncle to send you that five bucks worth of Bitcoin he promised for your birthday (ha!).

Here’s our Bitcoin address:

1G8Ayc15sqoyGzN4DFUeheRkgFeS9t6oSW

And our Ethereum address:

0xf0940C79d93E88450aA366238ef8C298Da11EB74

Note that those two look different. Because they’re completely different languages and sets of code.

Adding to your account

Here’s where the FIAT CURRENCY comes in: you’ll need to send money to your account using one of a couple methods. One is to link a bank account, and then your Bitcoin will appear in a few days, once the banking systems talk to each other and confirm your account. The other method is to use a credit card. There’s a fee attached – as there is to the bank account method – but the upside is that your Bitcoin will appear almost instantaneously.

Using Coinbase as your “hub”

If you’re brand new to Bitcoin, you can totally use Coinbase as your online hub, your gateway to the vast world of cryptocurrency. As you see above, you can get the current price quote, you can buy and sell – trade – your Bitcoin, you can send Bitcoin to folks you owe money to, and request it from folks who owe you money.

Here’s a snapshot of some of our recent activity.

But, as you might have guessed from some of our other posts here, this is only scratching the surface of our cryptocurrency activity. You can use your account to send money into one of the trading platforms, like Poloniex or Bittrex – two of the ones we use. Or you can invest in an ICO, such as the Exscudo or Sikoba coin offerings we have talked about here.

Pretty simple, right?

Yes, the fine folks at Coinbase have actually made this dummy-proof. Which is one reason they’ve raised so much capital and they’re the wallet of choice here. (It’s not just from that link up there that can score you a Bitcoin bonus with a qualifying purchase, and will also score us a Bitcoin bonus with your qualifying purchase. There’s that “win/win” again.)

Other Coinbase developments

This was mentioned by leading VC Fred Wilson the other day, and, given the growth of Ethereum as the backbone of blockchain applications, it’s probably worth checking out. Token launch from Coinbase.

When we stumbled upon this idea this morning, our first instinct was to play it rather cool with the headline. Something like “Introducing the BRED Portfolio: A Buy-and-Hold Bitcoin and Altcoin Investment Strategy.” And that sounds very straightforward, by the book. It’s also boring.

So we went with the clickbait headline.

Read on:

Why “BRED”?

There are a couple reasons behind this one – and it’s not just because these four letters fit together nicely. (They do, though. Props to us.)

It’s easy to remember, but it also includes four really solid tech stocks – and four companies that are, you could argue, doing quite a bit differently while still being in the same category.

We thought the same thing when creating this portfolio strategy: let’s get four of the biggest cryptocurrencies out there and put them in one bucket.

BUT, let’s do this with an eye toward the ones that have the best chance of long-term staying power.

While “BRED” works nicely as an acronym, these are also four coins that have managed to stick around in the crypto space.

We’re not just rationalizing…

B is for Bitcoin, and you couldn’t have a portfolio like this without Bitcoin, since it started this whole shebang, right?

R is for Ripple – which, for some reason, doesn’t have a ticker symbol that starts with “R” – and Ripple’s USDT price developments of late don’t tell the whole story; consider it the best chance of becoming the backbone of all crypto transactions throughout the world.

E is for Ethereum, whose “smart contracts” were, you could argue, the first yin to Bitcoin’s yang.

D is for Dash – “digital cash” is a very easy and consumer-friendly value proposition. We will argue that this one could win out based on the strength of its community alone.

Look at the rankings, though – if you visit Smith and Crown this morning, you’ll see that these are four of the five largest cryptocurrencies – in terms of market capitalization – in the world. In fact, going back to January 1, you would still have been picking four of the 7 largest cryptos, as shown in this chart from CoinMarketCap.com.

Argue with us if you’d like, but we’re going with this acronym. You’ll see why in a second.

Structuring the BRED Portfolio

To keep it simple, we used January 1, 2017 as our starting point. And, as opposed to weighting the portfolio by market cap – which would have had Bitcoin at about 92% of the portfolio, defeating the purpose – we went with a straight 25% invested in each.

To get the prices, we grabbed a chart from TradingView.com – our first-ever visit to the site, which is bloody easy to use, we might add – and use their figures for open price on January 1.

Thanks, http://tradingview.com

So there we are, a simple portfolio with four of the biggest crypto assets. But…how did it perform?

Quadruple. Your. Money.

What will remain to be seen here is whether or not this is an aberration – past performance not indicative of future results and all that.

But holy buckets this thing is on fire.

$10,000 invested equally on January 1 in four cryptocurrencies – Bitcoin, Ripple, Ethereum, and Dash – would have grown to $42,567.69 on April 1.

So…Now What, Smart Guy?

Yes, hindsight is 20/20. Looking back, the woulda-shoulda-coulda factor with the coins that aren’t named Bitcoin is pretty huge. And the volatility is such that today’s number on the BRED portfolio is more like $44,000 – and that’s due in part to the Ripple developments over the weekend.

But here’s our take – and we’re not investment professionals, nor do we provide legal advice – on what to do with this information:

Buy and hold. It doesn’t have to be these four cryptocurrencies, but you should consider having a few coins or tokens that you simply leave alone. Don’t trade them, keep them in cold storage, and worry about them only a little.